Are You Ready to Invest in a Fixer Upper?
I love DIYing things around the house. I also love investing. So is it any surprise that I daydream about investing in a fixer upper?
I picture lovingly redoing older homes, and then selling them for a tidy profit (if I can bear to let them go).
There’s one big problem with that:
I don’t have a spare $150K+ laying around to invest in even one house. I can’t go out and buy a house nearby for cash, spend months renovating it in my spare time while it sits empty, and then sell it. No part of that dream is feasible right now.
It turns out, it doesn’t have to be.
There’s a completely different way to invest in a house flip, and that’s pretty great if you ask me.
How to invest in a fixer upper without breaking the bank
There’s this newish thing out there called real estate equity crowdfunding.
Real estate equity crowdfunding is a fancy way of saying multiple individuals get together and invest money in real estate deals (crowdfunding property) and then of course any profits are shared out appropriately.
Those types of real estate deals can include investing in fixer uppers — properties that are renovated by someone else using money you and others invest in hopes of getting a good profit. Or the investments can be in new builds, apartment complexes, retail properties, etc.
Like any other investment, if you invest in something you find on a real estate crowdfunding site there are no guarantees, and there are high risks including loss of capital, but one potential advantage with crowdfunding is you can make investments for as little as $5000 in some cases.
$5000 is a whole lot easier to come up with than my imaginary $150,000!
Getting started with crowdfunded real estate
I learned about this method recently from the folks at San Francisco-based RealtyShares. (Full disclosure: while they’re not paying me to write this, I will get a small commission from RealtyShares if you sign up with them through any of my links. So if you do, thank you!)
Here’s how their service works, and how to get started with them if it interests you.
Basically, the RealtyShares site allows you to see potential residential, commercial, retail and mixed-use property investments. All kinds of deals, with different minimum investment requirements.
Here’s an example of one of their closed deals:
(You can see more examples on their site, or sign up to see actual available deals.)
These are pre-vetted opportunities from around the United States that include a breakdown of the risk factors and the return objective, the track record of the borrower, etc. You pick the real estate deal(s) that interest you, and then fund your investment using the RealtyShares platform.
Any potential returns (yay passive income!) are then paid right into your bank.
The site itself is completely free to use; but investors are usually charged an annual fee that’s typically 1% of the aggregate invested amount. See their site for the exact terms, fees, and investment risk factors for the deal & type of deal you’re considering, and for more details on how they review potential investment opportunities.
As a side note, if you’re looking to BE the person doing the renovating or building – where RealtyShares underwrites, approves and funds your project — you can apply to do that too by clicking here.
Why consider investing like this?
Using RealtyShares allows you to review a wide range of deals because their investment types include equity, preferred equity, and debt. (They have investments in over 220 cities and 35 states throughout the United States.) Detailed information about each deal is right at your fingertips.